Mojo - June 2012

A former executive at the Las Vegas Sands Corp., whose chairman is Republican mega-donor Sheldon Adelson, has accused the company of "controlling and directing" prostitution at its casinos in Macau, the Wall Street Journal reports. The accusations are part of a wrongful termination lawsuit filed by the former executive, Steve Jacobs.

In a statement Thursday, Las Vegas Sands spokesman Ron Reese said the company has "consistently maintained that the allegations of misconduct and wrongdoing by Jacobs against the company and its senior management are baseless." Mr. Reese's statement added, "Mr. Adelson has always objected to and maintained a strong policy against prostitution on our properties, a fact that Mr. Jacobs knows to be true, and any accusation to the contrary represents a blatant and reprehensible personal attack on Mr. Adelson's character."

Mr. Jacobs has already accused the company of firing him for objecting to Mr. Adelson's illegal demands, which allegedly included extorting senior government officials in Macau, threatening Chinese banks and using the services of a Macau lawyer despite concerns his retention posed risks to the Foreign Corrupt Practices Act, which bans bribery by U.S. companies abroad. The company denies the allegations.

In addition to the wrongful termination lawsuit, the report notes that the Sands Corp. is already under investigation "by the U.S. Securities and Exchange Commission and by the U.S. Department of Justice into possible violations of the Foreign Corrupt Practices Act."

the money shot

QUOTE of the week

"I am going to bundle every penny I can bundle."
—Rodger Young, a Romney donor-turned-bundler, speaking to ABC News at Romney's Republicanpalooza retreat last weekend. Hundreds of Romney backers attended, but who they were may be hard to ascertain: Romney has only disclosed his bundlers who are registered lobbyists, as required by law. (President Obama has raised at least $106 million from bundlers; Romney's raised at least $3 million.)

chart of the week

This week we launched our interactive map of the dark-money universe, which charts the biggest and most notable super-PACs and dark-money groups trying to influence the 2012 election, and keeps an eye on some of their top moneymakers. Bookmark the page—we'll be adding regular updates over the next few months.

stat of the week

$9 million: The amount the conservative dark-money outfit Americans for Prosperity plans to spend on ads attacking Obamacare now that the Supreme Court has upheld the law. "The Supreme Court's ruled and President Obama's now given us one of the biggest tax increases in history," the group's president, told Politico. "We're going to remind people of the disastrous components of this legislation." Meanwhile, the Romney campaign claimed it's already raised upward of $2 million off the court's decision.

attack ad of the week

The Obama campaign and the pro-Obama super-PAC Priorities USA Action took advantage of a lengthy Washington Post report that Bain Capital "invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India" during Mitt Romney's 15 years running the company. Romney campaign officials met with top Post editors to demand a retraction; they were denied. Priorities USA Action, which is run by former Obama press secretary Bill Burton, has released a "super memo" using the Post story to hit Romney. The president's reelection campaign (which can't legally coordinate with the super-PAC) released this ad deeming Romney "outsourcer-in-chief":

There's a thread of early analysis of the Supreme Court's ruling on the Affordable Care Act that says that Justice John Roberts may have rescued the Affordable Care Act but doomed future liberal projects. This counterintuitive argument stems from Roberts' analysis of the Commerce Clause, the section of the Constitution that authorizes most of the federal government's attempts to regulate the economy.

In the court battle over Obamacare, the government had argued that the individual mandate—the part of the health care law that requires Americans to purchase health insurance or pay a fine—was constitutional because the Commerce Clause gives Congress the authority to regulate interstate commerce. The government's lawyers said that without the mandate, the health care law wouldn't work, and because not having health insurance substantially affects the health insurance market (i.e., it affects interstate commerce), it was okay to fine people for not buying insurance. Conservatives argued that the mandate was not really regulating commerce, but forcing people to engage in it. They claimed the Commerce Clause allowed Congress to regulate "activity" but not "inactivity"—a distinction found nowhere in the Constitution itself.

Chief Justice John Roberts, despite voting to uphold the individual mandate as a tax, agreed with the conservative argument. As a result, some liberals are concerned—and some conservatives and libertarians are encouraged—by Roberts' reasoning, despite the fact that Obamacare largely survived.

When Obama and congressional Democrats cobbled together the deal to pass the Affordable Care Act, they were largely successful in getting all of the deep-pocketed key players on board, offering various sweeteners to get the pharmaceutical, medical and health insurance industries to back the bill. That's probably the only reason that the law passed in the first place. Healthcare reform, in turned out, could be good for business (witness the soaring stock prices of health care stocks after the Supreme Court's decision even as other stocks were falling). Conservatives seem to have forgotten that part of the story when they took the law to the Supreme Court and challenged the insurance mandate—and that's likely why they lost, too.

So this is weird. Above is an excerpt from the dissent in Thursday's Obamacare decision. Justice John Roberts joined with the liberals on the court to uphold the law. But did Roberts switch sides? The dissent (read it here, starting on page 127) repeatedly refers to the "dissent," not a majority opinion. Here's law professor David Bernstein, writing at The Volokh Conspiracy, a conservative legal blog:

Back in May, there were rumors floating around relevant legal circles that a key vote was taking place, and that Roberts was feeling tremendous pressure from unidentified circles to vote to uphold the mandate. Did Roberts originally vote to invalidate the mandate on commerce clause grounds, and to invalidate the Medicaid expansion, and then decide later to accept the tax argument and essentially rewrite the Medicaid expansion... to preserve it?

Justice Ruth Bader Ginsburg's opinion, which was joined in part by the other liberals on the court, dissented in part from Roberts' majority ruling. So that could explain the "dissent" language. But legal scholars still seem to think it's unusual to refer to Ginsburg's opinion as a "dissent," because Ginsburg was on the winning side. Here's Georgetown University law professor Lawrence Solum, writing about the passage highlighted in the image above:

Language like this is highly suggestive of a majority opinion. The reference to the dissent and "we" strongly suggests that the "we" was a majority of the Court. This suggests that Justice Roberts switched his vote. There are other conceiveable explanations, but in my opinion, this evidence is very strong indeed.

J. Brad Delong, a blogger and economics professor at the University of California—Berkeley, notes that Justice Clarence Thomas, who authored a separate, very short additional dissent (read it here, starting on page 192), refers to the conservatives' main dissent as a "joint opinion," rather than a joint dissent, as would be standard practice. It could just be a typo—but later in the same section, Thomas does use the phrase "joint dissent." So it's unclear what's really going on here.

Volokh's Bernstein thinks that Roberts' supposed switch is a sign he was "responding to the heat from President Obama and others."* The high court is famously leak-free, but this story is so interesting, and the stakes so high, that we may actually learn more about what really happened in the weeks and months to come.

*Correction: This post originally cited a post on ToBeRight.com as an example of right-wing conspiracy theorizing about the pressure that was supposedly put on Roberts to uphold Obamacare. Blogger Violet Socks (which she says is a pseudonym) makes a convincing case that ToBeRight is actually a satirical site. Please click through to her post for the original text and a full explanation of what I did wrong. Blurgh. I regret the error.

As they dominate the airwaves with political ads, dark-money nonprofits are coming under increased scrutiny. At issue is the charge that they're running afoul of their tax-exempt status by focusing on partisan political activity. Earlier this week, New York Attorney General Eric Schneiderman sent subpoenas to a nonprofit affiliated with the Chamber of Commerce to see if millions of dollars had been improperly funneled to the Chamber (a 501(c)(6) nonprofit) for political purposes.

Now, the Wall Street Journal reports, the Internal Revenue Service has begun a process of determining whether Karl Rove's Crossroads GPS should have to give up its nonprofit 501(c)(4) status and disclose its donors. Democrats and campaign-finance watchdogs have been urging regulators to crack down on groups like Crossroads GPS; last week the Obama campaign's top lawyer sent a snarky letter to Rove saying he was filing a complaint with the FEC "laying out the case—obvious to all—that Crossroads is a political committee subject to federal reporting requirements."

If the IRS revokes Crossroads GPS' or other 501s' nonprofit status, the Journal explains, "the organizations could be held liable for large tax bills for the millions of dollars they have received tax-free." However, reaching such a determination will likely take months. Which means that dark-money groups can keep spending freely on ads and promising anonymity to their donors through the November election.

Outside the Supreme Court on Thursday morning, momentary confusion overtook the gigantic crowd of Obama supporters, tea partiers, congressional lawmakers, and hapless tourists. After it was erroneously reported that the court had rejected Obamacare's individual mandate as unconstitutional, cheers went up from the side of the crowd where most of the tea partiers had gathered. But as news of the actual ruling trickled through the crowd, the tenor among the conservative activists quickly turned to anger, much of it directed at the high court.

"We are not going away," shouted one activist into a microphone. "Liberty and freedom will survive…We'll stay here until they get it right."

Another took the mic a few minutes later. "You might as well come get me, 'cause I ain't payin' it," she said. References to socialism, the Soviets, and communism abounded, along with chants of "Repeal it now."

Soon, a different response to the decision had taken shape. In their majority opinion, the justices had concluded that the individual mandate in the health care law is constitutional because it constitutes a tax. Conservatives in the crowd (and on the airwaves) quickly seized on the ruling as proof that President Obama and other supporters of the law lied when they claimed the healthcare law wasn't a tax in order to pass the legislation. "The Congress lied to the American people. The president of the United States lied to the American people," said Rob Schenck of the National Clergy Council.

"Obamacare is a malignant tumor that feeds on America," said Rep. Jeff Landry, (R-La.).

"Everyone who believes the president and those who work for him are fools," said Rep. Louie Gohmert (R-Tex.), who spoke to the crowd outside the Supreme Court after the ruling. "If America doesn't wake up and replace all of them who lied to us," he continued, "shame on us."

Cancer rhetoric was also popular, the irony of which seemed to be lost on those employing it. "Obamacare is a malignant tumor that feeds on America," said Rep. Jeff Landry, (R-La.).

"Today America is threatened with a stage-three cancer of socialism, and Obamacare is the first symptom," said Rep. Todd Akin (R-Mo.), who is running for the Senate this year against Democrat Claire McCaskill.

Tea party champion Rep. Michele Bachmann (R-Minn.) gave perhaps the longest speech, declaring that the law was "unconstitutional" and noting that "clearly this is an activist court." (Nevermind that Chief Justice John Roberts, a conservative, voted with the liberal justices and authored the majority opinion.) "America will never be the same because of socialized medicine," said Bachmann. "The government today is capable of forcing Americans to buy anything."

Others took a slightly different tack. "They may say this law is constitutional," said Rep. Phil Gingrey (R-Ga.), "but it's un-American."

Amidst all the unhappy tea partiers and congressional Republicans, I spotted a lone Democratic lawmaker—New York Rep. Jerrold Nadler. Nadler, who had previously fretted about how the "radical and unpredictable" justices might come down, was clearly pleased about the decision. I asked what he thought of the line of attack about the law constituting a tax that seemed to be developing. "So it's a tax. So what?" he said. "I thought the administration should have said that right out."

How are tons of US guns getting to Mexico? Ask conservatives.Flickr/Brian.chThe "Fast and Furious" imbroglio may have just gone sideways on House Republicans. Just prior to them leading a House vote for contemptagainst Attorney General Eric Holder on Thursday, a far-reaching investigation published by Fortune magazine poked major holes in the conservative storyline about the alleged gun operation. Claims that law enforcement engaged in a deadly plot to let Mexican outlaws smuggle US guns, the magazine reports, are based on allegations by a lone whistleblower who may in fact be the only person who did any illegal gun-smuggling. The real cause of violence and crime south of the border, it reports, is lax gun laws in Arizona and elsewhere pushed by Republicans and their friends at the National Rifle Association.

To review the allegations in brief: Agents from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) supposedly recruited local sellers in Arizona to hawk guns to known smugglers, then monitored the flow of those guns to criminal gangs in Mexico in the hopes of catching "big fish," in a tactic known as "gun-walking" (as opposed to "gun-running"). Two of these ATF-monitored assault weapons ended up at the crime scene where Brian Terry, a US Border Patrol agent, was shot and killed in December 2010. An ATF agent with a crisis of conscience blew the whistle on the operation, dubbed Fast and Furious, and Republicans in Congress began asking questions.

Now, Rep. Darrell Issa (R-Calif.), chairman of the House government oversight committee, suspects the White House of involvement in the affair, and has demanded the administration turn over scores of internal communications. The White House has acknowledged that mistakes were made and turned over more than 7,600 pages of documents related to the case. But Issa demanded another 100,000 pages of internal administration communications, and President Obama invoked executive privilege to keep the documents confidential. Issa responded by pursuing the contempt-of-Congress vote against Holder—the first ever against a sitting attorney general—on the notion that the DOJ screwed up on Holder's watch.

According to Fortune, though, almost everything about the story that Republicans have been flogging is wrong. And the magazine makes the case that the GOP's allegations against Holder and the Obama administration aren't just inaccurate—rather, they distract from the possibility that GOP's politics are actually to blame for the deluge of three-quarters of a million American guns per year into Mexico. "Republicans who support the National Rifle Association and its attempts to weaken gun laws are lambasting ATF agents for not seizing enough weapons—ones that, in this case, prosecutors deemed to be legal," the report states.

"Republican senators are whipping up the country into a psychotic frenzy with these reports that are patently false," Linda Wallace, an IRS agent who worked on the Fast and Furious team and calls herself a "gun-rights supporter," told Fortune. Could Fast and Furious be a new Climategate, the next fact-free conservative conspiracy that takes roost in America's collective unconscious?

The Fortune exposé, which reporter Katherine Eban says took her six months to assemble, is exhaustive and tough to summarize, but its highlights are these:

The Supreme Court upheld the Affordable Care Act by a 5 to 4 vote on Thursday. Maybe you heard. (My colleague Adam Serwer has a great analysis of what this actually means.) GOP presidential nominee Mitt Romney, responding to the ruling in front of the US Capitol, reiterated his pledge to spend his hypothetical first day in office working to repeal Obamacare. (House Majority Leader Eric Cantor is already promising another repeal vote in early July.)

But it's safe to say Romney, the only other elected official in American history to mandate that citizens buy health insurance, probably won't like this passage from Justice Ruth Bader Ginsburg's opinion, which partially concurred with Roberts and partially dissented:

By requiring most residents to obtain insurance, see Mass. Gen. Laws, ch. 111M, §2 (West 2011), the Commonwealth ensured that insurers would not be left with only the sick as customers. As a result, federal lawmakers observed, Massachusetts succeeded where other States had failed. See Brief for Commonwealth of Massachusetts as Amicus Curiae in No. 11–398, p. 3 (not­ing that the Commonwealth’s reforms reduced the number of uninsured residents to less than 2%, the lowest rate in the Nation, and cut the amount of uncompensated care by a third); 42 U. S. C. §18091(2)(D) (2006 ed., Supp. IV) (noting the success of Massachusetts’ reforms). In cou­pling the minimum coverage provision with guaranteed­ issue and community-rating prescriptions, Congress followed Massachusetts' lead.

Ginsburg, of course, is completely correct. And in a sane political climate, Mitt Romney would happily take credit for this. As it stands, he's in the uncomfortable position of once more distancing himself from his biggest political accomplishment.